June 30, 2014

A property tax exemption for solar power systems in
California has been extended to 2025, following the passing of a bill as part
of the annual state budget.

Senate Bill 871 (SB871) was approved during the signing of
the budget by governor Jerry Brown, which took place last week. The wording of
SB871 extends the period during which property taxes will not be applied to
"active solar energy systems", which includes PV and solar water
heaters.

This exclusion period was originally set to run until the end
of 2016 – it will now last until 1 January 2025. The issue of whether or not
property taxes could be applied on solar power systems, according to the
perceived value added to the property they are installed at, has recently also
surfaced in the US state of Arizona. At the beginning of May, it was revealed
that a reinterpretation of Arizona’s property laws could mean that systems
leased from a third-party owner would be eligible for property taxes.

Matt Feinstein of analysis firm Lux Research told PV Tech at
the time the Arizona reports appearedthat the solar industry could be
vulnerable to such alterations or reinterpretations to property tax law, as
they might be easier for lawmakers to enact than fresh laws that singled out
solar power systems for levying taxes on.

Feinstein said it was likely the changes proposed in Arizona
were another symptom of the “state by state” fight between the solar industry
and the incumbent monopoly over the electricity market held by utilities in the
US.

Reacting to the news from California, the Solar Energy
Industries Association (SEIA) head Rhone Resch commended Governor Brown’s
actions. He praised the governor “and his lawmakers” for their foresight and
for their “commitment to a clean environment”.

“The extension of the exclusion does not take funds away
from any jurisdictions where taxes are currently being collected, nor does it
have an impact on the General Fund. But the exclusion will reduce wholesale
solar electricity costs for utility customers, and it reduces barriers to
accessing solar for customer-sited projects. Simply put, many homeowners would
not choose to install solar if faced with a property tax reassessment,” Resch
said.

Governor Brown is widely acknowleged to have made numerous
efforts to promote solar power in his years in US politics. Another recent
piece of legislation, the proposed Assembly Bill 2188 (AB2188), would cut
so-called 'soft costs' for solar by streamlining the permitting process
required to gain approval for a residential solar power system in California.
Walker Wright, director of public policy at SunRun said earlier this month that
AB2188 could
help end the "bureaucratic nightmare" that the approval
process could often become.